A credit card offers great convenience by allowing the cardholder to make cashless purchases and to borrow against a line of credit. Unfortunately, credit cards are also vulnerable to fraud and abuses. As credit card use increases in recent years, fraud and credit abuse cases are on the rise as well. A fraud (or “credit card fraud”) occurs when a fraudster misappropriates someone else' credit card or credit information and puts the card or information to unauthorized uses (e.g., fraudulent credit applications or unauthorized purchases). A credit abuse occurs when a legitimate cardholder uses his or her own credit card(s) in an abusive or irresponsible manner (e.g., overspending without an intent to pay off the balance).
Both types of credit misuses can be costly to cardholders as well as card issuers. Cardholders victimized by credit card fraud may face unexpected financial liability and may find their credit ratings damaged. A significant portion of the financial losses due to fraud and credit abuse usually rest on the card issuers. Major card issuers typically have to absorb hundreds of thousands of dollars in fraud losses every month.
A number of solutions have been proposed or implemented to fight fraud and credit abuse. However, the existing solutions are predominantly “manual” processes which require the employment of highly trained fraud analysts. Due to the high volume of potential fraud cases, a large number of fraud analysts are needed to keep up with the processing tasks. The employment and training of the fraud analysts can be too expensive to be justified by the recovered fraud loss. Manual processing of fraud cases is typically unsystematic, which leads to results that are either inconsistent or inaccurate. Manual processing is usually slow in producing fraud judgments. Due to the poor quality and belatedness of manually generated fraud judgments, the card issuer often miss valuable opportunities to defeat ongoing misuses (e.g., by timely disapproving fraudulent charges) or to shift the fraud losses (e.g., by exercising charge-back against retailers soon after the fraudulent charges).
Other problems and drawbacks also exist.
In view of the foregoing, it would be desirable to provide a solution for detecting and processing fraud and credit abuse which overcomes the above-described deficiencies and shortcomings.